Why Does Employer Health Insurance Cost More Every Year?

What employer health insurance really costs in 2026, why those costs keep rising, and how to calculate what you're really paying for your family's healthcare.

The short answer: According to KFF, employer health insurance costs an average of $28,303 per year for family coverage in 2026, with employees paying $7,471 through payroll deductions. But that's only part of the cost. Deductibles, coinsurance, and the impact of rising premiums on wage growth add to the expense. If your employer plan is becoming harder to afford, alternatives include other workplace plans, ACA Marketplace coverage, and Medical Cost Sharing.

Between the mortgage, groceries, kids' activities, and everything else you pay for every month, healthcare is a big expense to carry.

If your employer offers health insurance, you might assume you're getting a pretty good deal.

But when your paycheck keeps shrinking, your deductible keeps climbing, and even a routine trip to the doctor comes with a hefty bill, it's fair to ask: How much is your healthcare really costing you, and is there another way?

How much does employer health insurance cost in 2026?

The average employer plan costs $9,804 a year for one person and $28,303 for a family, according to KFF's 2026 Employer Health Benefits Survey.

Here's how that breaks down:

If you work for a smaller company, you might be paying quite a bit more than you realize.

Employees at small firms contribute an average of $9,687 a year toward family health insurance, compared with $6,840 at larger companies…

… and that's before you start using your plan.

If you have a deductible, you'll have to pay that amount before your insurance plan starts covering more of your costs.

Among workers whose plan has a deductible, the average single deductible is $1,955, and 38% of covered workers have a single deductible of $2,000 or more.

So even with employer-sponsored health insurance, a big part of your family's healthcare costs still come out of your own pocket.

Why do employer healthcare costs keep going up?

If your health insurance costs already feel high, there's more coming.

Employers are bracing for another big increase in 2027, and the numbers are hard to ignore.

• Marsh's survey of more than 1,800 companies projects an 8.2% increase in healthcare costs after employers make changes to their plans. That's the largest increase since 2003. Without those changes, employers estimate costs would rise by 11%.
• Aon expects a 9.5% increase before cost-cutting measures, with average spending over $19,000 per employee.

What's driving these increases?

Three major factors keep coming up:

• GLP-1 medications: Marsh estimates that the growing use of GLP-1s will account for a full percentage point of the 2027 increase. Among large employers that cover these medications for weight loss, 29% told KFF that they've had a significant impact on prescription spending.
• More care for chronic conditions: More people are living with chronic conditions like diabetes and heart disease, and many need ongoing care to manage them. Aon points to this growing need as one reason healthcare spending keeps rising.
• Higher prices from healthcare providers: Hospital consolidation, rising provider prices, and costly new treatments mean employers are paying more for visits, procedures, and other medical services.

When employers pay more, you often feel it in your paycheck.

In 2026, 44% of large employers asked employees to pay more toward their health insurance, according to KFF.

That's one reason a 5% increase in the average family premium translated into a 9% increase in what workers paid.

Your health insurance costs more than what's on your paycheck

When you look at what you're paying for employer health insurance, it's easy to focus on the amount deducted from each paycheck.

But that's only one part of the cost.

You also pay when you need medical care, and there's a less obvious cost that could affect how much you earn over time.

Here are three ways rising healthcare costs affect your finances:

• Your paycheck: This is the share of the premium your employer deducts from your pay. In 2026, the amount workers pay toward family coverage rose 9%, while wages increased by just 3.7%.
• Your medical bills: When you need care, you're responsible for your deductible plus a percentage of the bill until you reach your plan's out-of-pocket maximum. Even with insurance, a major medical expense can mean a significant bill.
• Your future pay raises: Your employer's share of your health insurance premium is part of the overall cost of employing you. When that cost increases, there's less money available for other compensation, including raises.

A 2024 study in JAMA Network Open found that premiums grew from 7.9% of total worker compensation in 1988 to 17.7% in 2019.

Had premiums stayed at their 1988 share, the average family with employer coverage would have earned about $8,800 more in wages in 2019.

That last cost is easy to overlook because it never appears on your pay stub.

You won't get a notice saying your raise was smaller (or nonexistent) because healthcare got more expensive.

But the money has to come from somewhere, and over time, rising health insurance costs can mean fewer and/or smaller salary increases.

What’s your health insurance really costing your family?

Before open enrollment closes, take ten minutes to add up what you're actually spending on healthcare.

Your paycheck deduction is a good place to start, but you'll want to look at a few other expenses too.

Grab your latest pay stub and healthcare plan summary, then work through these four numbers:

Add up the first three numbers to estimate what a typical year might cost you.

Then look at your out-of-pocket maximum to understand what a high-need year could mean for your budget.

Once you know your number, you'll have a much better basis for comparing your current plan with other healthcare options.

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What are your options if your employer plan costs too much?

• A different plan tier at work: A higher-deductible plan with a lower payroll deduction, often paired with an HSA, can save you money if your family rarely needs care.
• A spouse's plan: Compare the cost of joining their plan with the total you just added up.
• An opt-out payment: Some employers pay workers who decline coverage. Ask HR whether this is an option for you.
• The ACA Marketplace: If your employer offers coverage that counts as affordable under federal guidelines, you generally won't qualify for Marketplace tax credits. HealthCare.gov explains the guidelines.
• Medical Cost Sharing: With Knew Health, you pay a predictable monthly contribution and an Initial Unshareable Amount per Medical Need. You get Medical Cost Sharing for unexpected Needs, plus Wellness Services and Resources.

There are two things worth knowing before you turn down your employer's health insurance:

First, turning down your employer's plan usually doesn't put the employer's share in your paycheck.

That money typically stays with the company, unless your company offers an opt-out payment.

Second, once you decline coverage, you generally can't rejoin the plan until the next open enrollment period or a qualifying life event, like getting married, having a baby, or losing other coverage.

Before you make a decision, confirm you understand what you're giving up and when you'll have another opportunity to enroll.

How does Knew Health compare to health insurance?

Knew Health is not insurance. We are Medical Cost Sharing.

With Knew Health, you get more than a way to manage the cost of unexpected Medical Needs – you get Wellness Services and Resources to support your health every day, whether you're feeling great or need a little extra care.

It's a simple, friendly, affordable healthcare alternative that gives you financial peace of mind for eligible Medical Needs and practical support to help you feel your best.

How does it work?

Members pay one monthly contribution and choose an Initial Unshareable Amount (IUA) of $1,000, $2,500 or $5,000.

When a new illness, injury, or pregnancy comes up, you pay your IUA once for that Medical Need, and the Community shares in your remaining eligible costs, per the Member Guidelines.

You never pay more than three IUAs in a Membership year, saving you money if you have a difficult year.

A few things set Knew Health apart from employer healthcare:

• Prices are stable. Knew Health hasn't increased Membership prices since opening in 2018, vs health insurance which has steadily increased.
• Wellness starts on day one. Annual well visits, screenings, and immunizations are shared up to set allowances, with no IUA or waiting period. Members get Health Coaching, no-cost and low-cost labs, a $200 yearly Self-Care Credit, and much more. What's Included with Knew Health lists the rest.
• You pick your doctors. Members have the freedom to choose their own licensed practitioners, including some holistic providers. No network restrictions.

Knew Health is worth considering if you work at a small company with a large payroll share, carry a high deductible you rarely meet, or want the freedom to choose your own licensed providers.

It may not be the right move if your employer pays for most of your family premium, or if someone in your household is in ongoing treatment for an existing condition.

“When my husband changed employers we were no longer able to afford health insurance.”
– Monica E., Knew Health Member, Trustpilot, September 2026

What the difference looks like for one family

This hypothetical scenario shows how the costs can compare. Employer plan details are examples, Knew Health amounts reflect current Membership pricing, and sharing is subject to eligibility under the Member Guidelines.

Meet Dana.

She’s 44 and gets health insurance through her job at a small company. Her plan also covers her husband and their two kids.

Her share of the family health insurance premium is $9,687 per year, matching the average for workers at small firms. Her plan also comes with a $4,000 family deductible and 20% coinsurance.

Because her premium comes out of her paycheck before taxes, the actual reduction in her take-home pay is about $7,784 per year.

That estimate accounts for the 12% federal tax bracket, Social Security, and Medicare taxes.

Now let's compare that with the Knew Health Membership for her family.

At the $2,500 Initial Unshareable Amount (IUA), her monthly contribution is $730, or $8,760 a year. Unlike her employer premium, this amount is paid after taxes.

Here's how the two options compare in a quiet year versus a year when someone in her family needs a major surgery:

In a year when everyone stays relatively healthy, Dana's employer plan costs her less.

But if someone in her family needs a $20,000 surgery for an eligible Medical Need, the comparison changes.

The Knew Health Membership costs less in this example, and she would also have the Knew Health Care Team there to negotiate her medical bills.

✓ Our negotiators average 46% savings, and often get bills down by 90% or more.

There are important differences to keep in mind: Dana's employer plan has an out-of-pocket maximum and includes care for conditions she already has.

The Knew Health Membership doesn't promise sharing for pre-existing conditions in the same way.

The point isn't that one option will always cost less.

It's that the best choice depends on your family's health needs, what you're paying now, and how much financial uncertainty you're comfortable taking on.

Understanding your own numbers – and what's eligible for sharing through Knew Health – matters much more than any one example.

Already a Knew Health Member and starting a new job with benefits?

Before you switch, take a little time to compare the numbers.

Your new employer plan might look affordable based on the amount coming out of your paycheck, but don't forget to factor in the deductible and coinsurance.

You’ll also want to consider whether you would have to leave the healthcare providers you already know and trust, if they’re out of network.

If you have a Medical Need in progress, talk with the Knew Health Care Team before making changes.

Your Knew Health Membership is yours – not your employer's.

It isn't tied to your job, so it stays with you if you change employers again.

Don't assume you have to choose between your new job and your Membership.

It's also worth asking whether your employer would contribute toward your Knew Health Membership.

An employer may pay some or all of a Member's monthly contribution.

Business owners can read Why More Small Business Owners Are Turning to Medical Cost Sharing and contact our friendly Care Team for business pricing.

Talk to the Care Team

If you're between jobs, our guide to alternatives to COBRA covers your options, and our 2027 cost outlook covers Marketplace plans.

Frequently Asked Questions

How much does employer health insurance cost in 2026?

The average annual premium is $9,804 for single coverage and $28,303 for family coverage, according to KFF.

Your employer pays most of that amount, but your share still adds up – and the premium is only part of what your healthcare may cost.

Deductibles, copays, and coinsurance can push your total spending even higher.

How much do employees pay for employer health insurance?

In 2026, workers pay an average of $1,672 a year for single coverage and $7,471 for family coverage, according to KFF.

If you work for a smaller company, that family contribution climbs to an average of $9,687.

Those payroll deductions don't include what you'll pay when you actually need care, like your deductible and coinsurance.

Why is employer health insurance going up in 2027?

Employers are expecting healthcare costs to rise another 8.2% to 9.5% in 2027, according to Marsh and Aon.

Several factors are driving the increase, including the growing use of GLP-1 medications, more care for chronic conditions, higher hospital prices as healthcare systems consolidate, and costly new treatments.

Those increases don't just affect employers – they can eventually show up in your paycheck and what you pay for care.

Do higher health insurance premiums lower my wages?

Rising health insurance costs can put pressure on wage growth over time.

A 2024 study in JAMA Network Open estimated that families with employer coverage would have earned about $8,800 more in 2019 if premiums had remained at their 1988 share of total worker compensation.

It's a cost you won't see on your pay stub, but it can still affect how much you take home over the years.

If I decline my employer's health plan, do I get the money?

Usually, no.

Your employer's share of the premium typically stays with the company unless it offers an opt-out payment.

Before declining, ask HR whether you'll receive anything for opting out.

Keep in mind that you generally can't rejoin your employer plan until the next open enrollment period, or a qualifying life event.

Can my employer pay toward a Knew Health Membership?

Yes, an employer may pay some or all of a Member's monthly contribution.

You join the Knew Health Membership as an individual Member, so it isn't tied to your job – and it stays with you if you leave the company.

If you're considering Medical Cost Sharing through your workplace, contact the Knew Health Care Team for business pricing.

Find out what healthcare could cost your family

You've seen what employer health insurance can cost, but what would another option look like for your household?

Before you renew your current plan, take a minute to compare.

Start with the numbers you've already gathered.

Add up what you're contributing through your paycheck, what you’re responsible for when you need care, and what a more expensive medical year could mean for your budget.

Then see what your monthly contribution would look like with Knew Health at each Initial Unshareable Amount (IUA) level.

It takes about a minute, and will give you a much clearer picture of how the costs compare.

If your situation isn't straightforward, you don't have to sort through the details alone.

The Knew Health Care Team can walk you through the Member Guidelines, explain how sharing works, and help you understand how your health needs fit into the picture.

You deserve to know what you're really paying and what your options look like before making a decision. Start by finding your number.

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Membership isn't available to people 65 or older, or in California, Illinois, Maryland, New Mexico, New York, Oregon, Pennsylvania, Vermont or Washington.

Knew Health is not insurance we are a Medical Cost Sharing Membership.